Target-oriented utility theory for modeling the deterrent effects of counterterrorism

Optimal resource allocation in security has been a significant challenge for critical infrastructure
protection. Numerous studies use game theory as the method of choice, because of the fact that an
attacker can often observe the defender’s investment in security and adapt his choice of strategies
accordingly. However, most of these models do not explicitly consider deterrence, with the result that
they may lead to wasted resources if less investment would be sufficient to deter an attack. In this paper,
we assume that the defender is uncertain about the level of defensive investment that would deter an
attack, and use the target-oriented utility to optimize the level of defensive investment, taking into
account the probability of deterrence